Supreme Court Preserves 'Fair Share' Fees for Full-fledged Public Employees

By Amy Rosenberger

On June 30, 2014, the U.S. Supreme Court issued its much-anticipated decision in Harris v. Quinn. A 5 to 4 majority of the Court maintained more than 35 years of precedent upholding agreements to require payment of fair share fees by state and local government employees. Because of the very unique employment relationship between the State of Illinois and workers who provide private, in-home health care services under Illinois’ Medicaid waiver programs, however, the Court held that the union representing this limited group of workers could not collect fair share fees if those workers elected not to become dues-paying members of the union. The ruling leaves undisturbed the Illinois statute allowing fair share fee agreements covering other public employees, and the law permitting home care workers to engage in collective bargaining with the State. It merely holds that Illinois home care workers who are not members of the union cannot be required to contribute to the cost of union representation.

The Court noted that unlike “full-fledged” State workers, the home care workers who filed the suit are hired by the individual patients (termed “customers”) and most of their terms and conditions of employment are controlled by the customers. Only their wages and benefits are set by the State. In 2003, the Illinois Legislature passed a law permitting these workers to organize and to bargain with the State over those terms of employment controlled by the State. After a group of home care workers voted to be represented by the Service Employees International Union (“SEIU”), SEIU negotiated an agreement with the State of Illinois that, among other things, nearly doubled their hourly wage and offered health benefits. The agreement also included a requirement that bargaining unit employees who are not members of SEIU must pay the union a fair share fee. The plaintiffs claimed that the agreement violated their free speech rights under the First Amendment to the U.S. Constitution by requiring them to pay a fee to a union that they do not support.

Since its 1977 ruling in Abood v. Detroit Board of Education, the Supreme Court has acknowledged that fair share fee arrangements in the public sector are constitutional.  In Abood, the Court held that the government’s interest in stable labor relations is served by the exclusive representation rule reflected in the American form of labor relations – where the union is required to represent all employees in a given bargaining unit, whether or not those employees are dues-paying members of the union.  

But the Court recognized that with this rule comes a problem of “free riders” – bargaining unit employees who benefit from union representation but who choose not to become members of the union, thereby obtaining union representation for free (or, more accurately, at the expense of their dues-paying coworkers). To prevent this potential unfairness in the exclusive representation system, the Supreme Court has consistently held that a public employer may agree to a “fair share fee” or “agency fee” arrangement whereby bargaining unit employees who are not members of the union are required to contribute their fair share toward the cost of the union representation they receive.

Importantly, the Harris Court expressly declined to overturn Abood as applied to full-fledged public employees. However, the majority refused to extend the reasoning of Abood to the “unusual status” of the home care workers in this case. Unlike full-fledged State employees, the home care workers’ conditions of employment are controlled mostly by private individuals – the customers, with whom SEIU has no authority to bargain. The subjects over which the State bargains with SEIU are “sharply circumscribed,” lessening the representational burden on the union, as well as the justification to require contribution by nonmembers to defray the cost of union representation. Under these circumstances, the Court held that requiring nonmembers to pay a fair share fee violates their constitutional free speech rights.

For more information about the impact of the Harris case, or about how to lawfully implement a fair share fee arrangement, contact one of Willig, Williams & Davidson’s Labor Department attorneys at 215-656-3600.